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Finance Guides

The European Commission adopted on 2 June a series of economic policy recommendations to individual EU Member States to strengthen the recovery that began a year ago. The recommendations are based on detailed analyses of each country's situation and provide guidance on how to boost growth, increase competitiveness and create jobs in 2014-2015. The emphasis this tear shifts from addressing the urgent problems caused by the crisis to strengthening the conditions for sustainable growth and employment in a post-crisis economy. As part of this package, the Commission has also adopted several decisions on Member States' public finances under the Stability and Growth Pact. Taken together, they represent an ambitious set of reforms for the EU economy.

The European Commission has today published a first comprehensive review of the financial regulation agenda as a whole. This economic review sets out how financial reform measures - most of which are now adopted - will deliver a safer and more responsible financial system by enhancing financial stability, deepening the single market for financial services and improving its efficiency whilst improving market integrity and confidence. Evidence suggests that the total expected benefits of the financial regulation agenda will outweigh the expected costs, both on a rule-by-rule basis and when considering the reforms as a whole. Many rules create considerable positive synergies, e.g. between the capital requirements package in banking and the reform of derivatives markets. The financial system is already changing and improving. This change will continue as the reforms take effect.

Today, SMEs face too many obstacles that hamper their economic activities within the Single Market. From the perspective of company law, they often find it costly and difficult to do business across borders. Only a small number of SMEs (2%) invest and establish subsidiaries abroad. The proposal for a Directive on single-member private limited liability companies tackles these obstacles as it would standardise requirements for the creation of companies with a single shareholder. It would remove the burdensome process of registering subsidiaries and make it easier for SMEs to operate across the EU.

The European Commission has today adopted measures to improve the corporate governance of around 10 000 companies listed on Europe’s stock exchanges. This would contribute to the competitiveness and long-term sustainability of these companies. Other proposals would also provide cost-efficient company law solutions for SMEs which operate across borders. The package of measures implements key actions identified in the Communication on the long-term financing of the European economy of 27 March.

The European Parliament on 3 April endorsed a draft agreement with the Council of Ministers on legislation to open up the EU audit services market beyond the dominant "Big Four" firms and remedy auditing weaknesses revealed by the financial crisis. The draft also aims to improve audit quality and transparency and to prevent conflicts of interest.

The European Commission adopted on 27 March a package of measures to stimulate new and different ways of unlocking long-term financing and support Europe's return to sustainable economic growth. Significant long-term investment will be needed under the Europe 2020 strategy and the 2030 climate and energy package, in infrastructure, new technologies and innovation, R&D and human capital. Investment needs for transport, energy and telecom infrastructure networks of EU importance alone are estimated at €1 trillion for the period up to 2020 as identified by the Connecting Europe Facility.

The European Commission agreed on 5 March a package of support identifying a number of concrete measures to assist Ukraine economically and financially. These measures should be seen as the Commission's contribution to a European and international effort to support Ukraine's economic and political reforms, and will be presented to the EU Heads of State and Government ahead of their extraordinary meeting on Thursday 6 March.

The European Commission published on 5 March its conclusions emerging from the in-depth reviews (IDRs) carried out into 17 Member States' economies In the same document, the Commission assessed progress in the correction of fiscal deficits in the Member States concerned, updating its opinions on Draft Budgetary Plans from last year. This is a key step in the now well-established European Semester of economic policy coordination, the yearly economic governance cycle through which the Commission works with the Member States to create the conditions for sustainable growth and employment based on sound public finances, in line with the Europe 2020 growth strategy.

As part of an intensified battle against tax fraud, the European Commission on 6 February 2014 launched the process to start negotiations with Russia and Norway on administrative cooperation agreements in the area of Value Added Tax (VAT). The broad goal of these agreements would be to establish a framework of mutual assistance in combating cross-border VAT fraud and in helping each country recover the VAT it is due. VAT fraud involving third-country operators is particularly a risk in the telecoms and e-services sectors. Given the growth of these sectors, more effective tools to fight such fraud are essential to protect public budgets. Cooperation agreements with the EU's neighbours and trading partners would improve Member States' chances of identifying and clamping down on VAT fraud, and would stem the financial losses this causes. The Commission is therefore asking Member States for a mandate to start such negotiations with Russia and Norway, while continuing exploratory talks with a number of other important international partners.

Judges imposing their countries’ maximum penalties for serious offences such as manipulating the LIBOR benchmark interest rate would have to stipulate at least four years in jail under draft rules approved by the European Parliament on 4 February 2014. These rules, which aim to restore confidence in the EU's financial markets and improve investor protection, now have to be formally approved by EU Member States.

Corruption continues to be a challenge for Europe, according to the European Commission. Affecting all EU Member States, corruption costs the European economy around EUR 120 billion per year. Member States have taken many initiatives in recent years, but the results are seen as uneven and the Commission says more should be done to prevent and punish corruption. These are some of the conclusions from the first ever EU Anti-Corruption Report published on 3 February 2014.
The EU Anti-Corruption Report explains the situation in each Member State: what anti-corruption measures are in place, which ones are working well, what could be improved and how. National chapters in English and in national languages are available here: http://ec.europa.eu/anti-corruption-report
The report shows that both the nature and level of corruption, and the effectiveness of measures taken to fight it, vary from one Member State to another. It also shows that corruption deserves greater attention in all Member States.

New EU rules on public procurement and concession contracts approved by the European Parliament on 15 January 2014 are expected to ensure better quality and value for money when public authorities buy or lease works, goods or services.

The European Commission has adopted new guidelines setting out the conditions under which Member States can grant aid to facilitate access to finance by European SMEs and companies with a medium capitalization (the so-called "midcaps"). Certain SMEs and midcaps, in particular innovative and growth-oriented SMEs in their early development stages, have difficulties to get funding, independently of the quality of their business potential. State aid can help address this funding gap, not by replacing existing funding channels but by attracting fresh money into new ventures through well-designed financial instruments and fiscal measures. These guidelines are part of the Commission's State Aid Modernisation (SAM) strategy, which aims at fostering growth in the Single Market by encouraging more effective aid measures and focusing the Commission's scrutiny on cases with the biggest impact on competition. The guidelines will enter into force on 1 July 2014.

Comprehensive rules to govern financial markets were agreed informally by negotiators for Parliament and the Council of Ministers on 14 January. These rules are designed to close the loopholes in the existing legislation, ensuring that financial markets are safer as well as more efficient, investors are better protected, speculative commodity trading is curbed and high-frequency trading is regulated.

The European Commission on 7 January adopted a common set of standards to improve consultation, participation and dialogue with partners such as regional, local, urban and other public authorities, trade unions, employers, non-governmental organisations and bodies responsible for promoting social inclusion, gender equality and non-discrimination during the planning, implementation, monitoring and evaluation of projects financed by the European Structural and Investment Funds (ESIF).

The European Commission today presented a major package of budgetary surveillance announcements, covering 13 eurozone Member States and 3 non-euro Member States, with a special focus also on the euro area as an economic entity in its own right. For the first time, the Commission has issued opinions on euro area Member States' Draft Budgetary Plans, which from this year must be submitted to the Commission by 15 October, at the same time as draft budgets are sent to national parliaments. Assessments have also been published regarding compliance with Council recommendations under the Excessive Deficit Procedure (EDP), potential breaches of the debt and deficit criteria under the Stability and Growth Pact (SGP), and on certain Member States' plans for structural reforms with a budgetary impact outlined in their Economic Partnership Programmes (EPP).

The 2014 Alert Mechanism Report (AMR), which launches the next annual cycle of the Macroeconomic Imbalances Procedure, provides an objective analysis of Member States' economies based on a scoreboard of indicators that measure internal and external competitiveness.
This year the AMR has found that several Member States are making progress in reducing their current account deficits and reversing losses in competitiveness. However, the AMR shows that further progress is needed to address high debt and the net international investment position of the most indebted economies, while high current account surpluses persist in some countries, suggesting possibly inefficient levels of saving and investment and the need to strengthen domestic demand.
The AMR recommends an in-depth review of economic developments in 16 Member States, which have different challenges and potential risks that could spill over to the rest of the euro area and wider EU. The AMR does not prejudge the results of these reviews, which aim to assess whether imbalances exist, and whether previously identified imbalances persist or are being unwound.

The Commission has proposed draft legislation to help restore confidence in the integrity of benchmarks. A benchmark is an index (statistical measure), calculated from a representative set of underlying data, that is used as a reference price for a financial instrument or financial contract or to measure the performance of an investment fund. The new rules will enhance the robustness and reliability of benchmarks, facilitate the prevention and detection of their manipulation and clarify responsibility for and the supervision of benchmarks by the authorities. The manipulation of the London Interbank Offered Rate (LIBOR) and the Euro Interbank Offered Rate (EURIBOR) resulted in multi-million euro fines on several banks in Europe and the US, and allegations of manipulation of commodity (e.g. oil, gas and biofuel) and exchange-rate benchmarks are also under investigation. The prices of financial instruments worth trillions of euro depend on benchmarks, and millions of residential mortgages are also linked to them. As a result, benchmark manipulation can cause significant losses to consumers and investors, distort the real economy, and undermine market confidence.

The Commission has today adopted a communication on shadow banking and also proposed new rules for money market funds (MMFs). These aim to ensure that MMFs can better withstand redemption pressure in stressed market conditions by enhancing their liquidity profile and stability.

EU Customs detained almost 40 million products suspected of violating intellectual property rights (IPR) in 2012, according to the Commission's annual report on customs actions to enforce IPR. Although this is less than the 2011 figure, the value of the intercepted goods is still high, at nearly €1 billion. Today’s report also gives statistics on the type, provenance and transport method of counterfeit products detained at the EU's external borders. Cigarettes accounted for a large number of interceptions (31%), miscellaneous goods (e.g. bottles, lamps, glue, batteries, washing powder) were the next largest category (12%), followed by packaging materials (10%). Postal and courier packages accounted for around 70% of customs interventions in 2012, with 23% of the detentions in postal traffic concerning medicines.